Lionsgate Shares Fall On Weak Tyler Perry Open And Early Criticism Of ‘Divergent’

The stock price closed -5.1% as worrisome developments from the weekend overwhelmed the announcement this morning of a 5 cent-a-share quarterly dividend. Lionsgate was teed up for a weak day after Tyler Perry’s Single Moms Club underperformed in its opening weekend. It generated about $8M domestically, making it Perry’s first film to open with less than $10M. It also was far less than the Street anticipated. For example, MKM Partners’ Eric Handler forecast $15M while Wells Fargo’s Marci Ryvicker predicted $17.5M. Investors might have overlooked the disappointment if it hadn’t been accompanied by early raspberries from the Hollywood trades for Divergent, the action-adventure film that Lionsgate hopes to turn into a Twilight- or Hunger Games-sized franchise after it opens this weekend. Variety criticized the film’s “uncertain sense of setting, bloated plot, drab visual style and solid yet underwhelming lead turns from Shailene Woodley and Theo James,” while The Hollywood Reporter called the film “clunky” and “almost unrelentingly grim.” Several analysts have told investors not to worry: There’s “enough tracking and Fandango visibility on Divergent‘s appeal to fickle Young Adult (YA) audiences to diffuse any plausibility for a box office hard landing,” Wunderlich Securities’ Martthew Harrigan said last week. Evercore’s Alan Gould also cited the strong tracking Friday when he raised his earnings per share estimate for Lionsgate’s fiscal year ending March 2015 by 5 cents to $2. He predicts the film will generate $45M in profits. “If the film is successful, we would not be surprised if [Lionsgate] converts the 3-book franchise into a 4-movie franchise similar to Hunger Games,” he says.